Levels to watch: FTSE, DAX and Dow

Indices did indeed spend the day filling in the gaps caused by Monday’s open, with a particularly impressive performance in the US.

US trader
Source: Bloomberg

FTSE could drop to January lows

 

The bounce back above 6500 proves that this is the level that sellers need to beat to keep the downward move in progress. For the bulls, we are waiting for a move back above 6600 that then clears the highs of last week around 6650. I fear that the presence of Greek news in the headlines will contain progress.

A close below yesterday’s low of 6450 would mean that the FTSE 100 is heading towards the January lows around 6300. 

DAX could challenge 11,500 area
 

Although it succeeded in repeating last Monday’s trick, the DAX still failed to breach 11,000. This is the litmus test for any continuing rally; a failure to break above here will target the 200-day simple moving average at 10,666. DAX bulls should be careful, since below here there is very little support until we near 10,000. Such a move would wipe out almost all the gains for the year.

If we can get back above 11,000 then we are watching for a break through the 14-day EMA (11,134), and then on to challenge the 11,500 area that saw the late June rally stall. 

17,800 level crucial for Dow
 

US indices stormed back yesterday, posting bullish crossovers on daily stochastics. However, the Dow JonesS&P 500 and Nasdaq 100 have yet to break through the highs from last week. For the Dow, the 17,800 level is crucial – a close above here would signal that the index may have mustered the strength to move on and attempt to break the 50-day SMA around 17,990. The 200-day SMA at 17,723 continues to hold, so any drop today may find support here.

A close below would target 17,600, key support from March, April and during last week, while a more sustained move lower heads towards 17,200 and the January lows. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.